The Marketplace Didn’t Really React
There was lots of press coverage (as usual) for yesterday’s Google announcement of its deal with Intuit. Much of it was sort of blah, matter of fact and cautious (press coverage should always be cautious I suppose). Many reporters were uncertain about how to react and whether this was major news or just another partnership announcement (for “distribution”).
I don’t want to drift into the realm of hyperbole or over-reaching but I don’t think people get this.
Intuit said that this deal was non-exclusive, meaning that it could turn around and do the same deal with Yahoo! or Microsoft or anyone: “According to [CEO Steve] Bennett, Intuit’s deal with Google is nonexclusive.” Certainly they told me this about the StepUp distribution portion of the deal.
This immediately makes them a huge channel partner and player in online marketing for small business.
Vista, a small business web hosting and marketing firm that has a deal with Sam’s Club, told me a couple of years ago that they hoped to eventually introduce a million businesses to Internet marketing (Sam’s Club’s SME membership). Somewhat conservatively, let’s say that Intuit has relationships with several million small businesses. (Out of 6.7 million Quicken and QuickBooks users exactly how many are small businesses is unclear to me at this moment.)
Let’s assume that Google has about 600,000 total advertisers. Intuit thus potentially brings something approaching 10x (at its maximum) Google’s entire advertiser base. Clearly there won’t be 100% adoption. As everyone has wisely pointed out it remains to be seen how many of these businesses opt for the marketing tools in the next QuickBooks. But let’s assume a modest 5% adoption; that means up to 300,000 more potential “advertisers” (query: will Google Maps users become advertisers?). And, the efficiency of this for Google is unlike any other relationship it has.
This is a massive, hard-to-efficiently-aggregate market segment that is much bigger than Google’s entire current advertiser base.
Small businesses are hungry to find ways into online marketing. My anecdotal conversations with SMEs make clear to me that they want guidance and simplicity, but they definitely want in. Recognizing and enabling that has been part of the “genius” of the directory publishers’ adoption of simplified search marketing as a product line.
I’m not trying to sound like a booster or a partisan here; I’m not. And I could be wrong of course, but I think this is a potential “game changer.”
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Michael Arrington made some legitimate points about small business data security and privacy issues with the data feeds and Google desktop. These are questions that Google and Intuit will have to directly address to provide assurances that data won’t be improperly used or otherwise compromised.
September 15, 2006 at 12:57 am
It is obvious why.
September 15, 2006 at 1:13 am
The AdWords piece of the marketing deal is also a problem. AdWords is a very complicated platform. It’s not as simple as creating a description of your business and choosing a few categories for a YP listing. For this to gain traction, Google needs to create a customized version of AdWords for Quickbooks. They tried a simpler version, called Starter Edition, but that won’t work. It forces advertisers to use the content network which is contextual advertising and not search engine advertising. It also uses a budget optimizer feature which doesn’t allow the advertiser to manage the CPC (cost per click). It also only allows the creation of a single ad. Most small businesses have many products and/or services. A generic ad doesn’t work with Google AdWords. No, Google needs to go back to the drawing board and create a version that walks a small business through the process of creating highly targeted ads. Either that, or Google needs to partner with search engine marketing firms that work with local clients.
September 15, 2006 at 3:57 am
Google AdWords is too complex for SMBs. I compare it to day trading in selecting the hot keyword, bidding, figuring out your position and actual CPC, then testing and tweaking until you get it right. This is too much work for SMBs.
But more importantly, search engine marketing works great for online stores because they can actually convert a click into revenue. So they can use industry standard numbers like (44 cents per click) / (1.5% conversion rate) = $29 per sale. But how does an offline business convert that click? Can we assume that offline conversion (calling a plumber or walking into a furniture store) is 10% of the online conversion? Then your talking $290 per sale. I don’t know what the correct offline filter is for this equation but it is certainly lower, because it requires more work and there is typically a time lapse between the click and the visit.
Frankly, I think that when it comes to SEM for offline SMBs, it doesn;t make sense…the emperor is wearing no clothes.
September 15, 2006 at 6:33 am
[...] Commenters Richard Ball and Mike Hogan have some reasoned and thoughtful retorts to my most recent post about the Google-Intuit deal. Also Donna Bogatin over at ZDNet has a long post that takes aim at the notion that the Intuit deal will yield any short term benefit for Google’s bottom line. She points out each of the hurdles in detail as she sees them. [...]